Central banks' macroeconomic forecasts: When two do the same thing, it is not the same thing

Soňa Benecká, Martin Kabrt and Lubos Komarek

A chapter in CNB Global Economic Outlook - February 2024, 2024, pp 14-19 from Czech National Bank, Research and Statistics Department

Abstract: What do central bankers base their interest rate decisions on? In this article, we compare the forecasting and analytical tools and processes applied by inflation-targeting central banks when making monetary policy. We draw on a questionnaire prepared by the Czech National Bank and distributed to the relevant units of 22 central banks in developed and developing economies in the second half of 2023. The responses reveal that a wide diversity of detail underlies the apparent similarity in central banks' internal macroeconomic forecasting processes. That diversity manifests in the range of analytical and forecasting tools used and the degree of transparency in the monetary policy process. We also show how the ownership of the forecast varies across banks and how intensively the bank's management is involved in preparing the macroeconomic forecast. Both have implications not only for the structure of the internal discussions inside the central bank, but also for the bank's external communications. We conclude by considering how the Covid and energy crises occurring in rapid succession gave rise to a new challenge for forecasting and for the role of forecasts in the monetary policy process in a context of growing tensions in the global economy. These events, among others, are motivating many central banks to review their monetary policy frameworks and often their modelling frameworks as well.

Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.cnb.cz/export/sites/cnb/en/monetary-po ... 4/gev_2024_02_en.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cnb:ocpubc:geo2024/2

Access Statistics for this chapter

More chapters in Occasional Publications - Chapters in Edited Volumes from Czech National Bank, Research and Statistics Department Contact information at EDIRC.
Bibliographic data for series maintained by Tomas Karhanek ().